Standing Committee E

[Derek Conway in the Chair]

Housing Bill

Clause 166 - Additional power to give grants for social housing

John Hayes: I beg to move amendment No. 277, in
clause 166, page 117, line 34, leave out 'companies' and insert 'organisations'.

Derek Conway: With this it will be convenient to discuss the following amendments:
 No. 278, in 
clause 166, page 118, line 37, at end insert— 
 '(e) any conditions necessary to ensure equivalence of regulation between recipients of grant under this section and registered social landlords. 
 (f) any conditions necessary to ensure equivalence of standards between recipients of grant under this section and registered social landlords.'. 
No. 279, in 
clause 166, page 118, line 38, leave out 'company' and insert 'organisation'. 
No. 280, in 
clause 166, page 118, line 40, leave out 'company' and insert 'organisation'. 
No. 282, in 
clause 166, page 118, line 40, at end insert— 
 '(6A) Conditions specified under subsection (6) will include those necessary to ensure equivalence of regulation between recipients of grant under this section and registered social landlords.'. 
No. 442, in 
clause 166, page 118, line 40, at end insert— 
 '(6A) The conditions in (6) will include provisions relating to accountability and the provision of information that are not less rigorous than those which registered social landlords must comply with.'. 
No. 283, in 
clause 166, page 118, line 47, leave out from 'section' to the end of line 7 on page 119.

John Hayes: We will all agree that it is good to be back to work after our brief sojourn, and I have no doubt that we will be in good heart and spirits as a result of that rest. I noticed that the Minister was getting a little irascible before the holiday—although I will not say that we were all on holiday. Personally, of course, I was dedicated to the welfare of my constituency in Lincolnshire. It was, at least, a break from our consideration of the Bill, which although important and, by and large, enjoyable, is beginning to come to an end. Our life together will be different following today, Mr. Conway, as we will not be blessed with your benevolent presence.
 I move to the clause under consideration, and specifically the Conservative amendments to it. It is an important part of the Bill, and although it is towards the end of the text, we should not underestimate its significance. The business of providing new money for social housing is something that we all have concerns about. There is a demand for additional resources to be invested in social house building. I do not want to embarrass the Minister at an early stage in our considerations but it is fair to say that the Government's record in the field is—and I put this as mildly as possible—lamentable. He must bear a reasonable share of the responsibility for that. The number of social houses being built is very small. There is no real sign of a change in that, and when I asked the Deputy Prime Minister specifically about the subject the last time I had the opportunity to do so, he, unsurprisingly, avoided my question. 
 I imagine that that is a concern that penetrates the whole of Government, and may have been the stimulus for this part of the Bill, because the Government recognise that they are failing and are considering ways to bring new money in and looking for new initiatives to boost the amount of social house building. One might think that that was fine, except that the lack of constraints imposed by the clause on those who will be commissioned to build such houses is dramatic. 
 The Government are proposing to make payments of social housing grant to builders and developers for the purposes of bringing forward more social housing. The funding route is proposed as an alternative, or at least to run in parallel with, funded housing through registered social landlords. Basically, builders and developers claim to be able to provide homes more cheaply. That would bring extra money in, as I described. 
 There are, however, real concerns. Our first amendment deals with the definition of organisations that might be eligible for such grants. The Bill mentions companies. I assume that that would effectively rule out arm's length management organisations, although the Minister may wish to correct me. The Minister shakes his head, but the Bill does say companies. It does not specify whether we are talking about public companies, organisations limited by guarantee or private businesses. The Bill is distinctly unclear about precisely which companies will be allowed to be involved in the process. 
 We are even more uncertain about the constraints that will affect those organisations. Housing associations and RSLs are subject to a raft of regulatory controls, extending to rent, activity, product and service controls. All that is policed by the Housing Corporation under statutory powers that include the effective ability to appoint persons to the board, or even, in extremis, to assume control of a housing association and force a merger with—or transfer to—another organisation, if that is deemed to be in the public interest. Many people would regard those controls—that due diligence—as quite proper. 
 Will such controls be applied to any of the private organisations that will now be given substantial sums of public money in a mission to build social housing? 
 I have no problem in principle with the proposal. As I said at the outset, I believe that we all share a determination to get extra money into the sector. However, surely it must be paid on the basis of equal consideration of risks, constraints and the accountability of the organisations, regardless of whether they are RSLs or private organisations.

Edward Davey: The hon. Gentleman makes some very valid points. Is not part of the problem the fact that the Committee has been asked to debate the clause and the policy proposal before the Government have published anything about how they expect the new power to operate? Does he agree that there is a complete lack of detail? It appears that the policy has not been thought through, and we are right to ask these questions.

John Hayes: Yes, there is a lack of detail. I said earlier that there was a lack of clarity. The hon. Gentleman has gone further and said that there is a lack of detail. Between us, we have got it right—there is a lack of both. Many organisations, individuals and local authorities, not simply Conservative and other Opposition Members in this Committee, have expressed concern.
 For example, when the Government consulted on the proposal, Westminster city council, one of the Minister's favourite local authorities, gave a detailed response and raised some of the issues that I have begun to explore. Its points were about the role of arm's length management organisations—ALMOs. I am not sure that the council is yet convinced that the Government have got that right in the Bill. One of its strategists suggested to me this morning that the Bill was imperfect in that respect. The council has taken legal advice. Perhaps the Minister can assure us that his own research contradicts what I have been told by Westminster city council; I wait to hear what he has to say. 
 My hon. Friend the Member for Cities of London and Westminster (Mr. Field), who is an outstanding servant of that part of the city, shares his local authority's concerns and my own. He is ever diligent about such matters, and he is particularly concerned about the provision of social housing and the welfare of his most vulnerable constituents—he will be able to put that in a local newsletter, will he not? 
 There are specific concerns about what will happen if the grant system is extended without the very strict regulatory regime. Inevitably, various kinds of organisation will be brought into the process. The Minister will know the history of some private organisations that have built social housing and got into difficulties. I believe that that subject was raised in an earlier sitting of the Committee. One thinks of some of the construction difficulties that arose when people who were not subject to strict controls built social 
 housing, and of some of the buildings of the 1960s and 1970s that were subsequently demolished. A Labour Member raised that very point in an earlier sitting. 
 Similarly, one must consider the industry's record of business failure and the possible vulnerability of public funds in such circumstances. Against that background, we must also properly consider the record of housing associations and other RSLs, which has been extremely good. The tight rules that govern those organisations have had two effects. The first is that quality has been consistently high. Of course there are less strong housing associations—I do not make an unqualified case in their favour—but, for the most part it is true to say that housing associations have delivered good-quality housing. Some of the best social housing in recent years has been developed by innovative housing associations. 
 Secondly, there has not been much leakage of public funds. By and large the controls, and the powers vested in Government to intervene as and when necessary, have meant that public funds have been pretty secure. The effect of those two points has been a great deal of investment in the sector by banks, venture capitalists and others, supporting the activities of RSLs, because they know that their investment is relatively secure, given the legal framework in which those organisations operate. 
 The amendments are designed to tease out many of those points. We do not say that we disagree with the idea of bringing in the private sector carte blanche—but I do not want to lapse into French, because I cannot compete with the Minister on that front, as he will be able to tell from my rather imperfect accent. We need to know that if that happens, public funds will be protected, the product delivered will be of high quality, and the investment that the Minister seeks will follow through, in terms of the confidence of the financial institutions and others. Those are the reasons for the amendments. 
 Housing associations have concerns. Last week, while others might have been on holiday, I had a meeting with people from the Longhurst Group, an organisation with its headquarters in Boston in Lincolnshire, which builds very well in my constituency and in other parts of the country. They speculated that the result of this part of the Bill might be: 
 ''That schemes will be developed to different standards, probably smaller space standards as a minimum; Rent regulation will be impossible to implement; Tenants and customers will have little involvement in the running of the companies procuring or developing the housing assets; Surpluses or profits generated from the management of the assets will not be used for the benefit of the community but will be paid to shareholders; Developers/builders will undoubtedly pick the easiest developments and customer groups''. 
That is important, because if we look at the vertical market activities of housing associations, we see that one of their great strengths has been the building of houses for disabled people, and accommodation adapted specifically for a range of people with special needs—one thinks of housing associations that specialise in providing homes for elderly people, for example. Finally, the Longhurst Group says:
 ''Housing associations will be left to develop in the most difficult areas and with the most difficult customer groups, costing more and making the comparison between them and developers look even worse.'' 
There are other points to make, but I will reserve judgment until the Minister has had the opportunity to answer those that I have already tried, in a humble and imperfect way, to articulate—it is well at least to start the day modestly. 
 The hon. Member for Kingston and Surbiton (Mr. Davey) is right. One of the reasons why those many questions have arisen is that the Government have not been entirely clear. I know that there is a seething discontent on the Minister's own Benches on this subject. Labour Members are perfectly able to see that vulnerable people may be put at risk if this part of the Bill is not dealt with in a thorough and measured way. The Minister has not only failed to convince me about this part of the Bill and my amendments, he has clearly not yet convinced the Liberal Democrat Members either. He must convince the wider community, who are very concerned indeed about the wider implications of the Bill, and are enthusiastic about my amendments. On the tide of that enthusiasm, I urge members of the Committee to give their fullest consideration to the amendments, which are proposed in the public interest.

Matthew Green: Good morning, Mr. Conway. One of the reassuring things about coming back after a week's break and seeing the hon. Member for South Holland and The Deepings (Mr. Hayes) on his feet first is knowing that I have another 15 minutes to read my notes.
 Our amendment No. 442, which is in this group, is a probing amendment. The clause can be summed up in two of its subsections. Subsection (3) says: 
 ''The Secretary of State may by order make such provision in connection with the making of grants under this section as he considers appropriate.'' 
That is pretty broad. Then subsection (6) says: 
 ''In making a grant to a company under this section the Relevant Authority may provide that the grant is conditional on compliance by the company with such conditions as the Authority may specify.'' 
I wonder why the Government bothered with the rest of the clause. 
 Part of the problem is that we do not know what those two broad regulation-making provisions will do. Therefore, our amendment to subsection (6) insists that the standards expected of private companies should be no lower than those expected of RSLs. We do not take a dogmatic approach to the question of who provides public services, but we want to see equity and fairness across the board; we do not want some tenants to be exploited and others protected. I am sure that the Minister is not suggesting that tenants will be exploited or will receive a lower standard of provision. We want him to put it strongly on the record that the standards that will apply to private companies that build and manage social housing will at least equal those for RSLs. If not, we shall be extremely cautious about supporting the Government on the clause, and I hazard the idea that we would not do so. 
 I am sure that the Minister will provide reassurance. We tabled amendment No. 442 because the clause is as about as detailed as a Conservative policy proposal. As we did not want to leave the Minister in a difficult position, we have given him an opportunity to flesh it out in greater detail.

Vera Baird: I am grateful to the Tees Valley housing association, which apprised me of its concerns about this part of the Bill, and specifically this clause, so that I could raise them with my right hon. Friend the Minister, who I am sure can help me to assuage them.
 The Tees Valley housing association asks whether the proposal to allow social housing grant to be paid to companies and private developers will help to create more affordable housing more efficiently or will reduce the number of affordable homes. That is the crux of its concern. This housing association is a key mover in housing provision and development in the Tees valley, where the Redcar constituency is situated. As I think my right hon. Friend is aware, it has set up an organisation called Tees Valley Living, which is intent on large-scale market renewal and housing redevelopment, so it is a central player. 
 As has been said, housing associations have a strong record in delivering high-quality and cost-effective homes, and they respond to emerging good practice and to Government objectives. Sustainability is central to their objectives and culture. They reinvest in the neighbourhoods that they serve through housing improvement, regeneration and community service, and they therefore offer value for money not only to the taxpayer but to the local community. If private businesses are to receive subsidies, it seems clear that surpluses should likewise be reinvested for social purposes; otherwise the long-term effectiveness of subsidies will be diminished even if initial value might seem to have improved. 
 It is likely that private developers will be interested in homes for low-cost home ownership, but unless much needed rented homes are provided on the same site, we shall fail to deliver mixed communities of the kind that we need in my constituency. Developers cherry-pick the attractive key worker developments—it has been suggested that it is inevitable—and then it will no longer be possible for housing associations to make new rented homes viable through cross-subsidy. 
 It is only fair that housing associations and private developers compete for public grant on a level playing field, but that will not be achieved if the Government impose different regulations. I see that the Minister is nodding vigorously in agreement with me. He has already supplied some information about the regulation backing up the grant system, and I am sure that he will be able to assuage our concerns. 
 I have a list of the risks that attached to the proposal to fund unregulated organisations. First, grant could be diverted from more complex regeneration. Secondly, subsidy to private developers is likely to increase land values; if not it will increase profits. Thirdly, inadequate regulation will reduce the 
 confidence of lenders and consumers in the low-cost home ownership market. Fourthly, long-term surpluses might be distributed as profits to investors instead of being reinvested in neighbourhoods. Fifthly, the supply of more costly but vital housing, such as sheltered housing, could be correspondingly reduced. 
 Those are the series of concerns that I raise on behalf of my very active local housing association. I am perfectly satisfied that the Minister will be able to answer all of them.

Keith Hill: It is great to be back, Mr. Conway. I have listened very carefully to the contributions of colleagues. In response to their speeches I hope to be able to assist with definitions, and about the use of grant, the standards of new build, which have been raised, equities and fairness, which have been mentioned by the hon. Member for Ludlow (Matthew Green), and propriety in the conduct of companies, which was mentioned by the hon. Member for South Holland and The Deepings.
 I hope to be able to address the basic issue raised by my hon. and learned Friend the Member for Redcar (Vera Baird). The issue of whether there will be a level playing field between RSLs and non-RSLs in the grant-making process underlies our entire debate. I hope to offer some reassurance to the Committee and to make an actual offer at the conclusion of my remarks. 
 Clause 166 is a value for money measure. It is designed to give us more affordable housing more quickly, with the best value for money, and with the same safeguards and protection currently afforded the public purse as well as occupiers and prospective occupiers of properties. We want a more cost-effective and transparent approach. We intend to bring innovation and flexibility, as well as new skills and expertise, to the delivery of affordable housing, and thereby increase supply quickly and creatively and improve value for money. 
 The relevant authorities—the Housing Corporation in England and its counterpart under the National Assembly for Wales—have a strong record of delivering affordable housing to meet needs. They have developed new affordable housing products, such as Homebuy, shared ownership and key worker schemes. In the last few years, although more money has been available through grant, this has not been sufficient to keep pace with rising build costs. In other words, we are spending more but building less. Given that demand is outstripping supply, the time is now right to test whether the commercial sector can deliver better value for money. We want to see whether that can be done, and encourage it if it can. 
 Let me be clear: the Housing Corporation will continue to devise and invite bids in to grant schemes just as it does now. The objectives and the standards to be met will—as now—be set out in the scheme. Those important facts must be defined at the start. It will be open to RSLs and non-RSLs to bid for grant and 
 deliver the specified products. We are considering delivery of essentially the same products in better and more cost-effective ways. In other words, we want to meet the urgent needs of real people more quickly. 
 As things stand, grants under section 18 of the Housing Act 1996 can be made only to registered social landlords. New section 27A, which clause 166 will add to the 1996 Act, empowers the relevant authorities to make grants to companies that are not registered social landlords. New section 27A(1), together with the definition in new section 27A(9), makes it clear that such a company must be either a company registered under the Companies Act 1985, which can include a charitable company, or—I come to the question raised by the hon. Member for South Holland and The Deepings—an unregistered company established by a local housing authority under section 27 of the Housing Act 1985—in other words, an ALMO. New section 27A(2) defines the purposes for which grant may be given. 
 Those purposes, which mirror the purposes for which grant can be made to RSLs under section 18, are as follows: first, the provision of homes for would-be purchasers that would be for sale under either low-cost home ownership arrangements, otherwise known as equity percentage arrangements, or on shared ownership terms; secondly, the construction, acquisition, repair, improvement or conversion of homes suitable for this purpose; thirdly, the position of loans to be secured by mortgages to help people acquire properties for their own occupation; fourthly, the provision of homes for rent, including schemes where the long-term management of the homes is undertaken by an RSL; and fifthly, other purposes provided they are specified in an order made by the Secretary of State under new section 27A(4)(d). I shall speak later about the means that the Housing Corporation will use to control and manage the relationship with non-RSLs. The Committee will see that there are a number of issues to address.

Matthew Green: The fifth point on that list would allow the Minister to expand the range of the provisions. Would he consider expanding that range into the section 106 price-capped housing as used in south Shropshire? I know that the Minister is considering the use of that measure elsewhere in the country. Those are privately built, price-capped, affordable-to-buy homes. That might be a useful route by which to encourage the process in other parts of the country, and the Minister has left it open for himself should he wish to follow it.

Keith Hill: This Minister and the present Government are always open to constructive and creative solutions to housing issues. I pay tribute to the hon. Gentleman: no one could be more assiduous in promoting a scheme from their own constituency than he has done in the case of south Shropshire. I begin to feel that when I die, ''the section 106 scheme in south Shropshire'' will be found inscribed on my heart. We shall look at all sensible and reasonable proposals—even, I might add in a fit of generosity, Liberal
 Democrat proposals—in a spirit of openness and readiness to take on board a good idea, should one be demonstrated.
 I return to my main thesis. As for the way in which the grants will be allocated, we envisage that both RSLs and non-RSLs will be able to bid for grant under the schemes developed by the relevant authority. We consider it worth proceeding with this approach, because we know that the commercial sector is interested in exploring the opportunities that the provision will open up.

John Hayes: Will the Minister give way?

Keith Hill: I shall give way to the hon. Gentleman in a moment. Let me complete my thought.
 The commercial sector's ability to provide affordable housing directly has already been demonstrated through, for example, section 106 agreements, but we believe that with grant support, it can deliver more units. Perhaps I can develop that thought a little further before giving way to the hon. Gentleman. 
 At present only RSLs can receive social housing grants. The measure will open them up to a range of organisations, and the skills, experience and knowledge that they possess. I do not want to detract from the outstanding contributions that RSLs have made to new house building and to the affordable and social housing sector, not least the Tees Valley housing association, to which my hon. and learned Friend the Member for Redcar referred. She and I have talked about its role in the past. However, there is inevitably a limit to the incentive for RSLs, as not-for-profit organisations, to seek measures to reduce costs. Organisations motivated by profit may, therefore, be able to secure greater efficiencies, which can be reflected in the price paid by the grant-making bodies. The Housing Corporation's 2000 review noted that the incentives for the centre were weak, and that this was therefore a role to be addressed by regulation. 
 I shall now give way to the hon. Gentleman.

John Hayes: In his last point the Minister made a valid argument for the propensity of not-for-profit organisations to be less than diligent on occasions about burgeoning costs. He has talked about the purposes for which grants will be given, and he suggested equivalence of purpose. He also talked about the means by which they will be given, and equal accessibility, but he has not said anything about any of the restraints implicit in the 1996 Act, which I have a copy of here. The Bill would make grants available to different organisations but with different constraints, unless the Minister intends simultaneously, or very soon, to amend the 1996 Act. He tells us only that different types of organisation will access the same kind of grant and that the purposes for which they must access that grant would be equivalent, so none of the other constraints would apply, unless he intends to amend the 1996 Act. If he does, will he tell us now?

Keith Hill: The hon. Gentleman should allow me to develop my argument a little, and I shall come to his point that the constraints that will apply to RSLs will also apply to non-RSLs. I intend to cover that in some detail.
 I hope that the Committee will forgive me for speaking at some length on this subject, but as it is a new area, the Government must clarify their intentions, and I am aware of the anxiety felt by the social house building community. We expect the commercial sector's role to evolve and emerge over time. We think it likely that in the early days it will be most interested in the new-build Homebuy model. I shall outline the details. A non-RSL might bid for grant to provide developments where purchasers pay 75 per cent. of the market value of the property and the non-RSL holds the remaining 25 per cent. share. The purchaser pays no interest on that 25 per cent., but when he sells the property, 25 per cent. of the sale price is paid back to the developer. The grant conditions may stipulate that the 25 per cent., or a portion of it, must in turn be refunded to the relevant authority or reinvested in a new scheme approved by the relevant authority. That is, in principle, the same as the current Homebuy option offered by some RSLs, and it has freed up social units for rent by enabling people to move into home ownership. 
 The other products—shared ownership and homes to rent on the basis of assured tenancies or assured shorthold tenancies—will be more complex and more difficult to establish because they involve a long-term landlord relationship with tenants or shared owners. We think that those relationships might best be managed by RSLs. That might be achieved by an RSL managing or taking over the properties from the non-RSL. The relevant authority will clearly need to listen to the views of the commercial sector to test that.

Matthew Green: Government new clause 35, which will be discussed later, is about disclosure of information to RSLs for purposes of the Crime and Disorder Act 1998. Given that the Minister is making provision for RSLs that are acting in their capacity as landlords to be given information under the 1998 Act, I am intrigued to know whether the same would apply to a private company that is landlord to social tenants. There is a slight danger that later Government amendments will shift the position again.

Keith Hill: We shall deal with that later. The hon. Gentleman raises a perfectly fair point that will need to be taken into consideration, and I am grateful to him for raising it. At this stage, there is no obvious simple answer to his question, but I emphasise that we think it unlikely, at least in the short term, that the provision that we are debating will lead to that social landlord function on the part of non-RSLs. If it did, we would need to take the sort of consideration that he raises into account.
 New section 27A(3) is an enabling power that allows the Secretary of State to make such provision as he considers appropriate in connection with the making of grants; the power will be exercisable by the National 
 Assembly for Wales in relation to Wales. The order-making provision specifies that an order may, in particular, define the equity percentage arrangements that will apply, specify the bodies from which mortgages may be obtained for homes provided under the powers, establish the priority to be given to mortgages when an equity loan is used to purchase the property, and set out any additional purposes for which a grant may be given to non-RSLs. I emphasise that that provides the appropriate national authority with the same powers in relation to grants to non-RSLs as are currently in place for grants under section 18 to RSLs. 
 New section 27A(5) places a duty on the relevant authority to specify the procedure in relation to applications for a grant; the circumstances in which the grant is or is not payable; the method of calculation and any limits on the amount of the grant; and the manner and timing of the payment of the grant. That provision also mirrors the current arrangements for grants to RSLs. New section 27A(6) gives the relevant authority the power to make payment of the grant conditional upon compliance with conditions that it may specify. New section 27A(7) enables the relevant authority to apply, in certain circumstances, conditions requiring payment to that relevant authority of sums of money, with or without interest. 
 As the Committee will appreciate, when drafting the clause we intended to create, as far as possible, a level playing field for all bidders for grants for these purposes. New providers will not be able to receive a grant unless their scheme proposals can match or exceed RSL performance both in terms of the number of homes to be delivered and in terms of quality. I hope that that bold statement goes some way towards reassuring my hon. and learned Friend the Member for Redcar. I hope to offer more reassurance as I continue my remarks. 
 I shall deal with the grouped amendments in two parts. I shall deal first with those amendments that relate to the bodies eligible to receive grants, and secondly with those that relate to grant conditions. 
 The first sub-group of amendments, Nos. 277, 279, 280 and 283, which were tabled by the official Opposition, deal with the bodies that should be eligible to receive grants. Amendment No. 277 would remove the restriction whereby only companies are able to bid for and receive grants by extending eligibility to organisations not otherwise specified. Amendments Nos. 279, 280 and 283 are consequential on amendment No. 277. Amendments Nos. 279 and 280 would replace references to ''company'' with ''organisation'', and amendment No. 283 would remove the definition of ''company'' from new section 27A(9). 
 In supporting the provision of affordable housing through the grant system, we have established, through the relevant authorities, a system that safeguards both the public money that is invested, and the interests of tenants and prospective tenants. The range of organisations that can apply to the relevant 
 authority to become RSLs is already wide, encompassing charities, industrial and provident societies, and not-for-profit companies, each of which operates in a specific regulatory framework. 
 We consider it inappropriate to extend the opportunity to bid for grants to any organisation, bearing in mind that the purpose of the measure is to improve the provision of affordable housing. There are several reasons for that. First, there is no evidence to suggest that the proposed system will exclude any significant potential entrants to the affordable housing sector. I emphasise that our objective is to provide opportunities to bodies that are capable of making a real difference to the availability of affordable housing. We believe that, realistically, such bodies can only be registered companies or ALMOs. Secondly, companies, as defined under new section 27A(9), operate in an existing statutory framework that gives relevant authorities ready access to key information and provides other regulators with opportunities to scrutinise their conduct and apply sanctions if necessary. As members of the Committee know, companies are obliged to file information, including audited accounts, with Companies House. The roles and responsibilities of company directors in respect of governance and financial viability are defined, and the system is transparent to public scrutiny. Well established procedures exist in the event that a limited company becomes insolvent or ceases to trade. 
 The costs and difficulties for the relevant authorities that would arise from attempting to devise a robust contract and ongoing monitoring arrangements to cater for organisations that are not companies would far outweigh the contribution that other organisations are likely to make to the overall objective. For those reasons I cannot support the proposed amendments. 
 The second sub-group of amendments, standing in the names of both Conservative and Liberal Democrat Members, relates to the powers of the relevant authority in respect of conditions of grant. Amendments Nos. 278 and 279 would impose a duty on the relevant authority to specify what conditions it will be necessary to impose on a grant to a non-RSL to ensure that there is a system of regulation equivalent to that exercised over RSLs, and that there are equivalent standards between RSLs and non-RSLs that receive grants under the 1996 Act. Amendment No. 282 would require the relevant authority to include in its conditions of grant any condition specified by the relevant authority as one that ensures the equivalence of regulations between recipients of grants under new section 27A and registered social landlords. 
 New subsection (6) enables the relevant authority to make the grant conditional upon the non-RSL's compliance with such conditions as that relevant authority has seen fit to impose. The regulation of RSLs is not limited to grants: it is a comprehensive system that examines all of their affairs to ensure that they are, and remain, financially viable and that they are properly governed and managed because, as not-for-profit organisations, they have no equity. In contrast, public money—paving grants to non-RSLs—will be protected by different means, probably 
 a charge on the land and other grant conditions. The relevant authority's objective will therefore be to secure the viability of the development, rather than of the company itself. That can be achieved with conditions of grant expressed in, monitored and enforced through the contract. 
 It is unclear what standards the amendment refers to. Is it standards of workmanship or construction? Standards are, and will continue to be, set in respect of the grant funding. The relevant authority will define funding schemes for which RSLs and non-RSLs will be able to bid. Many matters relating to standards are defined in the schemes. Grants are subsequently given subject to those standards being attained. If a non-RSL is successful in winning funding, we envisage that the standards that the relevant authority deems appropriate will be set out in the contract between them. As I said about the equivalence of regulation question, compliance with the conditions will be ensured through normal contract monitoring and enforcement by the relevant authority.

Matthew Green: Clearly, there will be a difference in the standards expected when a private developer builds a home for a shared equity and when it builds on a given site its percentage of affordable housing, which is expanded through a grant and then handed over to an RSL. It is relatively easy to prescribe conditions and quality of build. The Minister has already said that it is unlikely, but if one of those private companies became the landlord and therefore accepted tenants from the local authority housing list, that could be a long-term arrangement and something that the Housing Corporation, which is the grant-making body, is not going to be adept at regulating. It would probably fall to local councils to regulate. We are into a much more complex area and I wonder whether the Minister could say something about it. Although he has described it as unlikely, he has not ruled out such a possibility, so I wonder whether he could set out how he envisages that situation working. It seems to me potentially complex, and it would need a lot of regulation of the private company.

Keith Hill: I do not deny that, again, the hon. Gentleman has raised a perfectly reasonable point even if, as we both recognise, it is an extremely unlikely scenario.
 As we have debated, there is already a large body of public law that relates to the standards and protection of tenants in rented accommodation. We would certainly expect that body of law to apply to the management of properties. At the same time, I concede to the hon. Gentleman that we are talking about a situation in which a non-RSL is undertaking a function traditionally undertaken by RSLs. In those circumstances, we would have to reflect on the nature of the landlord-tenant regime that should apply. 
 I am trying to draw from my recollection a case where already, interestingly enough, a private developer has engaged in a development of affordable and social housing. That developer has created out of itself, for the administration of those properties, an RSL: it has become an RSL for the purposes of 
 administering them. That might serve as the precedent we seek, but only time can tell. None the less, the hon. Gentleman raises a good, what-iffery point.

John Hayes: Two points arise from the Minister's comments. First, the involvement of private developers in RSLs is often in mixed developments, where there is a cross-subsidy—in other words, the private developer develops market housing that it can sell and funds social housing out of that. RSLs are prohibited from doing that—they are not allowed to build houses for sale on the open market. It is highly unreasonable to put one set of conditions in place for one group of people who will be eligible for grants, and another set for a different group.
 Secondly, will the Minister confirm that section 27 of the 1996 Act makes clear that grants can only be recovered from RSLs? Therefore, if public money were in jeopardy, unless that legislation was amended, it would be difficult to recover funds if an agreement with a private developer went pear-shaped. Perhaps the Minister will elucidate.

Keith Hill: I meant to discuss recovery of grants before the conclusion of my remarks on the earlier point about what is permissible. We envisage that, in terms of the grants, non-RSLs and RSLs will be building the same kind of provision, including for Homebuy, shared ownership and renting. I have said that we intend to deliver, as far as possible, a level playing field between RSLs and non-RSLs. However, it is not appropriate to do that by means that could restrict unnecessarily the relevant authority's flexibility by being too prescriptive, or that could become unnecessarily burdensome to either party. It will be for the relevant authority to determine the conditions of grant to be imposed through any particular contract. In so doing, the Housing Corporation will work closely with my Department.
 Amendment No. 442 is intended to require the relevant authority to impose conditions regarding accountability and the provision of information, so that the result is not less rigorous than those with which RSLs must comply. The amendment is unworkable for two reasons. First, it tries to place a requirement on a regulator in a discretionary situation—in other words, it requires the relevant authority to do something, but only if it chooses to exercise the power in subsection (6). Secondly, the scope of the words ''accountability'' and ''provision of information'' are not defined and could be far too wide ranging. I have explained that we cannot and will not try to replicate a regulatory relationship through a contractual one. However, that does not mean, that in the context of a contract, the relevant authority would not place appropriate reporting and information conditions upon the RSL. 
 I have explained why it is inappropriate to try to create by means of a contract a pseudo-regulatory relationship between the relevant authority and the non-RSL that replicates the relationship between the relevant authority and an RSL. I have shown that the amendments are not necessary to protect either the 
 public purse, or the interests of prospective or actual occupiers of properties. Nevertheless, that does not mean that I believe that the Secretary of State should not be able to influence the conditions of grant that are expressed in the contracts. For that reason, I am considering whether the clause should be amended to give the Secretary of State power to exercise some further control over those conditions. If I conclude that he should, subject to clearance, I expect to table an amendment on Report. I hope that that reassures the Committee on the concerns that it has expressed, and I urge the hon. Member for South Holland and The Deepings to withdraw the amendment.

Edward Davey: This has been a fascinating debate. I have been moved to speak because the Minister has provided more information. In particular his last statement suggests that the Government are beginning to think through their policy, using a suck-it-and-see approach as the legislation passes through the House. The Government are dipping their toe in to see whether they want the water hotter or colder. However, we cannot work out whether this is a modest measure to promote low-cost home ownership or shared-equity schemes, or whether it will be much wider and the Government want the private sector to go full throttle into the affordable housing sector.
 In response to my hon. Friend the Member for Ludlow, the Minister said that it is extremely unlikely that companies receiving the grants will go on to manage the letting of those properties. That is a significant statement, which raises further questions. If the developers are to be given a public subsidy to build more homes on the basis that that provides better value for money—which seems reasonable—how does the Minister envisage RSLs, which will be given the properties to manage, being able to influence the design process? Many RSLs' experience of managing and running properties determines the way in which they like properties to be designed and built. I am concerned that, in being given large chunks of property built by public subsidy, landlords have some way of ensuring that a quality standard is met so that they can do their job as landlords properly.

John Hayes: The hon. Gentleman makes a useful point about the relationship between construction and subsequent management. Design is not the only element affected, although he is right to raise that. Other elements include the market sector in which the RSL is operating and the location of the properties in relation to other properties. I hope that he and the Minister reflect that it might be better to introduce legislation that encourages partnership between the private sector and RSLs, rather than legislation that says nothing about that, except what the Minister has said—under duress—in Committee.

Edward Davey: The hon. Gentleman is being rather hard on the Minister. Many partnerships exist between private developers and RSLs, but he makes a fair point that that needs to be encouraged further. I hope that the Minister responds to that.
 As for the wider points that the Minister raised, there seems to be a suspicion in the Office of the Deputy Prime Minister that the RSL sector is becoming flabby and inefficient, and has not been able to respond to demand in the way that the Government wanted. The Treasury has huge house building targets and money is being poured in, but it is not going as far as Ministers would like. That is the argument, but is that the fault of the RSL sector or of something else? Rising land prices are probably the main reason. 
 Ministers have little evidence on which to base their feeling that the RSL sector has become inefficient. There may be issues to do with accountability and other aspects of the sector's operation, but efficiency is not necessarily one of those issues. If it is, perhaps the Government should consider other aspects. Rather than say, ''Right, we'll take all this public subsidy and give it to someone else,'' they should consider how to review incentives within the housing association sector. Perhaps we should consider whether RSLs could be developed into more mutual organisations, in which tenants are more involved so they have an incentive to ensure that their housing association operates. The incentive comes from the actual users.

John Hayes: The hon. Gentleman makes another good point. He really is on exceptional form this morning—one might say untypical form, if one were being less kind.
 In a sense RSLs are already closer than many private companies are to the type of collaborative, consultative model that he described. There has been no suggestion, either on the face of the Bill or from the Minister, that private companies would be any more likely to have that sort of relationship with their clients. I am sure that he will acknowledge that some RSLs already have very good relationships.

Edward Davey: Absolutely. If there is a concern about efficiency, the policy issue is how to improve performance. The Government so often take away subsidy and give it to someone else, but perhaps they should address issues within the sector to see whether there are other models and developments. Another way is to look at the section of the Act that sets out how not-for-profit organisations have to operate in terms of salaries and rewards to their executives and senior management, which is important to maintaining the not-for-profit ethos. Perhaps the Government should examine the governance of RSLs. Remuneration options may offer a way to create incentives within the model.

Keith Hill: What?

Edward Davey: The Minister asks what I mean by that. I was thinking about performance-related pay, for example, although I believe that that is not allowed under current legislation. As long as they do not conflict with the not-for-profit ethos of the sector, incentives could be built in.

Matthew Green: I suspect that the Minister will not be very helpful regarding performance-related pay, because he will be very worried that were he to allow it
 in the RSL sector, there might be demands that to relate Ministers' pay to the building of new social homes.

Edward Davey: My hon. Friend is unusually tart with the Minister. I was trying to get him on our side, so that was not a terribly helpful intervention.
 I hope that the Minister will take a much wider view of the housing development sector. Getting it right is important. Taking money away from RSLs and giving it to someone else may be the solution—we are not against it on any ideological grounds. However, the thinking behind such a move has to be deeper and better. At the moment, the impression is that policy has been made on the hoof and not well thought through. That is why it causes such concern and why hon. Members must keep asking the right questions.

Keith Hill: I fully concede that we want to build more social housing. The problem is that the Government are pouring huge investment into the housing sector—the Housing Corporation's approved development programme this year contains increases of 50 per cent., or £500 million—but we face a dilemma. We pour money into new social and affordable housing where the demand is at its greatest—notably, in London and the south-east, where land prices, construction costs and labour costs are all very high, so we are simply not getting the bang for the buck that we want. To achieve that is the purpose of the provisions of the Bill.
 I totally understand the point that has been made by all members of the Committee about quality of design and new build. There appears to be anxiety, perhaps born of experience, that we are paving the way for inadequate standards of new build. However, I have made it clear that we are talking about a level playing field and the imposition of the same standards via grants to non-RSLs as we apply to RSLs. I have no expectation that there will be any decline in the quality of new build as a result of the provisions—on the contrary, the Government have dealt with design and housing standards in a way that this country has not witnessed for a generation or more. 
 The hon. Member for Kingston and Surbiton asked about building and management by RSLs in the same context—the question whether the quality and design would be appropriate. As I said, any developer operating on the basis of a grant under the terms of the clause would almost certainly build only when there were clear arrangements for the future of the development. It is also open to the Housing Corporation to encourage the partnership working that he mentioned through the detail of the schemes that it sanctions under the arrangements. It is also possible for arrangements to be proposed in the bids by non-RSLs. 
 I am fascinated by the hon. Gentleman's proposals for what he called remuneration options, which turned out to be performance-related pay. I am sure that that suggestion will be examined with great interest by the housing associations, and it is an interesting development of Lib Dem policy. I am teasing him on 
 that point, but I want to make it clear that I reject totally his uncharacteristic scaremongering about the Government's attitude towards housing associations. The Government do not believe that the Housing Corporation and housing associations are flabby and inefficient, and there is no hidden agenda in the Bill to eliminate their role, which we cherish, endorse and are further validating. The changes are not a matter of fault on the part of the Housing Association; as I have made clear, they are about injecting an element of competition into the house-building process. 
 I was surprised that a member of the party of Bright and Cobden, who were great advocates of the market, should apparently resist that element of competition. We have seen the Conservative party change its tack on several issues—not least the equivalence of rights between same-sex and heterosexual couples—within days of pronouncements from an apparently made-over Michael Howard. This is another instance in which an historic renunciation has been made. I can indulge the hon. Member for Kingston and Surbiton a little, as Bright and Cobden expressed their views 150 years rather than a few days ago, but there has obviously been a movement away from the grand days of the free market and laissez faire on the part of the Liberal Democrats, and it appears that they are opposed to competition. This Government think that a mite of competition in this area can only serve to do good, and we hope that it will lead to the construction of more affordable housing for those of our citizens who desperately need it.

Edward Davey: The Minister is in danger of misleading the Committee. The Liberal Democrats are not opposed to competition or even to the measure. We are trying to find out what the Government meant by introducing this provision because they have not been terribly clear, but we think that it is good and we have not opposed it in the slightest.
 I want to help the Minister in his slight leg pulling of the Conservatives. Did he notice the impact of the Conservative shadow Chancellor's spending proposals? Did he calculate that there would be a £1.9 billion cut under the Conservatives? 
Keith Hill rose—

Derek Conway: Order. I understood that the Minister had concluded.

John Hayes: We have had an interesting debate. John Bright has risen again like a phoenix from the ashes, and the Minister has given an interesting display of the new Labour commitment to free enterprise and competition. However, those of us who have some background in business understand that competition in this sector must be fair competition, and I am not convinced that the Bill lays out a set of statutory arrangements that are fair and reasonable.
 I am surprised that the Minister did not deal with the EU. The part of the Bill that we are considering might cut across EU competition rules. EU regulations stipulate that when this kind of grants are issued on an unequal basis they are illegal. Those words are not mine, but those of the National Housing Federation, 
 and as he has been so supportive—in his later remarks at least—of housing associations and their representatives, I know that he will take them very seriously. 
 What advice has the Minister sought about the proposals' impact on the future of housing associations under EU competition rules? If the Government award public grants to private developers, the current agreement between the EU and the UK Government to exempt social housing grants from EU competition requirements may cease to exist. Even if that does not happen at once, it will do so very quickly. Has he considered that it may be unlawful for a social housing grant to be paid to a developer under different terms and conditions from those that apply to housing associations? 
 I imagined that the Minister would anticipate those questions, so I did not ask them initially because I thought that it would be slightly patronising of me to do so. However, as he has not dealt with them, it is important to ask them now. I know that he will have an answer to hand, and that he will probably offer it to us in any one of a number of European languages.

Keith Hill: It has been a wonderful source of entertainment during this Committee's proceedings that the hon. Gentleman rises in every debate to raise an entirely new issue based on the extent to which he has managed to scrabble through his documents on the matter under discussion. I am grateful that he has raised the issue of European legislation now. It is very important, and I am in a position to announce that we are aware of EU state aids matters and will properly take them into account.

John Hayes: That response typifies both the strange mix of charm and lack of clarity for which the Minister has become legendary during our proceedings and the Government's approach to this part of the Bill. The hon. Member for Kingston and Surbiton is right: there is a lack of detail. More detail has emerged as we have debated matters in Committee, but I am still not satisfied that, given the day-to-day practice of involving private organisations in the building of social housing, we have received proper clarity from the Minister about what circumstances will prevail.

Matthew Green: The hon. Gentleman is enjoying himself at the expense of the Minister to some extent, but I am confused. We made it clear that we have nothing in principle against the private sector taking such action, provided that there is a level playing field. The Minister seems to concur with that, although at times in a confused way, but the hon. Member for South Holland and The Deepings is beating about the bush. Will he come to the point and say whether thinks that such a proposal is okay in principle or whether he is against it? I have listened to him extensively and I do not understand his party's position.

John Hayes: To hear a Liberal Democrat test any other party in the House on an issue of principle has a smack of irony. If the hon. Member for Teignbridge were on performance-related pay, he would be paying us—he has been in Committee so rarely.

Edward Davey: Teignbridge?

John Hayes: Before the Liberal Democrat party advocates bizarre policies about performance-related pay of RSLs, it should consider the principal points that concern us in Committee.

Edward Davey: Will the hon. Gentleman give way?

John Hayes: Before I do so, I want to answer the hon. Gentleman's point fairly and squarely. At the outset, I said that we had no problem with the idea of involving the private sector in the provision of social housing. If he checks the record, he will see that I expressed that view, but said that I supported such involvement only on the basis that the competition is fair and that there is equivalence in the constraints within which the organisations work. We are anxious to ensure that public money is protected, that high-quality social housing is built and that practices are responsible and deliver quality management for the tenants in social houses.
 We do not want housing associations to be singularly disadvantaged under the Bill. We want equivalence, and if the hon. Gentleman had taken the trouble to read our amendments, he would know that. Amendment No. 278 refers to 
''conditions necessary to ensure equivalence of regulation between recipients of grants under this section''. 
We do not argue that recipients should not be allowed to have grants, but if they are to have public access to public money, we believe that that should be on the same basis that currently applies to registered social landlords under the terms of the 1996 Act. It is a matter of consistency. 
 The Government could have taken a different approach. I shall be frank with the hon. Gentleman and the Committee. The Government could have done one of two other things, or indeed both of them, rather than draft the clause. They could have loosened the constraints under the 1996 Act and allowed existing registered social landlords more scope to become involved in mixed developments and/or facilitated better collaborative arrangements between the private sector and existing social landlords. 
 The Minister is right to say that there are problems with the number of social houses being built. He will have the figures, and he has apologised implicitly for the Government's failure in that respect. I congratulate and thank him for doing so. He will know that almost 40,000 social houses a year were being built in 1993-94, and the figure is now about 20,000. He has acknowledged that there is a major problem. He is right to say that part of it is caused by land prices and may concern some existing registered social landlords. I do not defend the record of all housing associations in building the number of houses that we or the Government would like, but that is not sufficient ground for taking such a radical step without putting 
 in place the necessary control mechanisms and accountability. That is our concern, and it is a concern that has permeated the debate and lies behind our measured amendments.

Edward Davey: I have to correct the hon. Gentleman on two points. First, my hon. Friend the Member for Teignbridge (Richard Younger-Ross) is serving on the Committee considering the Fire and Rescue Services Bill. The hon. Gentleman should know that and acknowledge it, and therefore apologise to my hon. Friend.
 I also have to correct the hon. Gentleman on the real issue that the Government must address with respect to the involvement of RSLs in mixed developments. RSLs can be involved in mixed developments now. The problem arises only when they are charities. The real policy issue relates to a dispute between Customs and Excise and Inland Revenue with respect to VAT shelters that were agreed to enable tax-efficient planning for housing associations post stock transfer. The crack that emerged between that Customs and Excise proposal and a new ruling by the Inland Revenue on the corporation tax liabilities of RSLs post transfer is the issue in respect of mixed development, and not some of the things that he mentioned.

John Hayes: The hon. Gentleman must be careful. The effect of the constraint in the 1996 Act is that housing associations are not permitted to develop housing for outright sale. That would not be true of the sort of companies that will be involved in the new process, which will simultaneously receive Government funding. It would have been possible to loosen the constraints of the 1996 Act to allow RSLs to play a different role in housing provision from the one that they play now. I should have thought that that would at least have been worthy of serious consideration, given their track record of providing social housing, their experience of managing it and, as the Minister rightly acknowledged, their reputation for providing, in large part, high-quality housing.
 As the Minister said, the housing associations do some excellent work, and I endorse that view. Given that that is the case, it might have been better to work more closely with them and to expand social housing provision by facilitating more innovative partnerships. I accept that there are already opportunities, as the hon. Member for Kingston and Surbiton said, and the Government could have chosen to take that route to achieve an increase in the number of social houses being built, rather than the route that they seem to have taken—a parallel structure in which they say to private organisations ''We will give you the grants and we will continue to support RSLs.'' Yes, there will be some opportunity for management overlap, but there is no great clarity about that. 
 The Minister said that it seemed to him unlikely that private developers would construct houses unless they put in place appropriate arrangements for their subsequent management. I am not sure that that is true. I do not think that most private organisations 
 would be terribly concerned about what might happen 10 or 20 years down the line. They will be most concerned about the profit opportunity of initial construction and the return to their shareholders. That is not an unreasonable position for them to take, but I am not sure that they would be terribly worried about ongoing management responsibilities if there were no statutory requirement for them to be so. That seems to be what we are being told, however—that it will all be dealt with by an informal agreement and a chat round the fireside between local housing associations and private companies. I do not share the Minister's faith in that view. I believe that there will at the very least be a need for guidance and possibly statutory change to provide the equivalence that I called for in my amendment. 
 In conclusion, I ask the Minister to reflect on a few ideas that have been put to me by the housing association sector. He has generously said that he will perhaps come back on Report with further thoughts on this issue, so I hope that these remarks will be useful in that process. First, he could choose to amend the 1996 Act to enable RSLs to compete to build for outright sale, generating profits to be used in their businesses for other purposes. 
 Secondly, the Minister could require developers to pass on developed schemes to existing registered social landlords for management in the long term. That would enable the project to be brought within the regulatory controls, enabling tenants to enjoy protection and involvement. The hon. Member for Kingston and Surbiton was right to say that there are issues concerning the protection of tenants in the process, not only at the development stage but on an ongoing basis. They are best guaranteed by RSLs having a key role in the process, either by statute or guidance. 
 Thirdly, as well as the sites that they choose to develop, developers could be required to develop for difficult customer groups and in difficult areas. I expressed the concern earlier and amplify it now that businesses will be likely to go to where they believe that they can minimise costs and maximise profits—not an unreasonable assumption from a commercial point of view. However, I am worried that existing RSLs will be left with the difficult sites and client groups. That is not desirable, as I know the Minister will agree. We must be careful about the constraints that we put in place so as to avoid that becoming likely. 
 The Minister could also encourage developers to seek partner RSLs with which to work and provide housing schemes specified by their customers, so that the necessary space and other standards can be achieved in the development. We discussed earlier the consultative approach at construction stage that would allow the client groups a role in defining the quality standards that the Minister rightly said that he was anxious to maintain. 
 Essentially, the changes must be backed up by careful consideration of the requirements of the 1996 Act. The Minister implied that that would be part of his further consideration, and I hope that it will be. I hear what he says, and his tone this morning has been 
 helpful and reasonable. He has acknowledged what he and I described as ''anxiety'' among people outside this place about the provisions. He has said—with his typical wisdom—that he will consider that anxiety, listen carefully to what has been said today and perhaps take some of it on board. On that basis, I shall ask to withdraw amendment No. 277, because the Minister has made it absolutely clear that the companies that will be involved in this include ALMOs—that was one of my concerns. He is anxious not to open it up to other organisations that, by definition, would be less accountable and less open to scrutiny. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn.

John Hayes: I beg to move amendment No. 454, in
clause 166, page 118, line 33, after 'payable', insert
'including that where the grant is for a building built using modern methods of construction the method must conform with an accreditation scheme approved by the Secretary of State'.
 One of the areas in which RSLs are regulated is standards. I have a strong view about the quality and aesthetics of housing. It has been unfashionable among Governments of all parties to consider such matters, and problems have become especially profound at the affordable and the social end of the market. We as a nation must not fall in to the trap of allowing affordable housing for sale or social housing to be of low quality.

Derek Conway: Order. Before the hon. Gentleman develops his argument further, I suggest that he may have wandered on to debating amendment No. 278, whereas he should be moving amendment No. 454.

John Hayes: No, I am moving amendment No. 454.

Derek Conway: Are you? Because when we come to amendment No. 278—

John Hayes: I am discussing amendment No. 454.

Derek Conway: I must have misunderstood.

John Hayes: It is indicative of my inability to make my case as cogently as I should that, even with your acumen, Mr. Conway, you were not able to follow it and thought I was moving a different amendment. I take the full blame, as I cannot have been making my case with the necessary clarity or force. Let me therefore make it absolutely clear that my aim is to ensure that the methods of build, the quality of construction, the standards and the aesthetics of the new houses that will be built if the clause becomes law should be the best possible.
 The Minister has acknowledged those considerations in his remarks and noted that there have been bad experiences. One thinks of the concrete houses mentioned in earlier debates, many of which have been condemned and some of which have been demolished, even though they were built only during my short lifetime. There are bad memories of some of 
 the housing built in the 1960s and 1970s, and we are concerned that the provisions of the Bill could create that situation again. I shall clarify what I mean by that. 
 The Minister said that the Government are anxious that they are getting too little for their money: they are putting a lot of money into social housing and are not getting enough product out at the other end. The easy solution is to build lower-quality housing to cheaper standards of construction, and thus get more for their money. The Minister has made it clear that he does not want that to happen, and I congratulate him on that, but the first instinct of some of the less scrupulous companies that might become involved in the process might be to do precisely that. That is of particular concern because it seems that such companies will be lightly constrained in future.

Sally Keeble: Might the hon. Gentleman be thinking of some of the prefabricated buildings used for short-term housing, where the issue is not so much cost as it is speed?

John Hayes: I was not specifically thinking of that, but the hon. Lady is right to raise it. There has been a lot of discussion of the need for prefabricated building and off-site building to meet demand because of the number of houses that we will need to construct in the next decade or two, but there are problems: the industry says that it does not have the capacity to develop off-site building to the extent that will be necessary to meet demand.
 I was not specifically thinking of prefabricated buildings, although they would be affected by the amendment, which contains an implicit guarantee that would protect tenants from poor construction of prefabricated buildings. I was thinking of concrete buildings and the kind of timber-framed buildings with a fairly short life that can be constructed easily. I am concerned that housing will be built that is not up to the standard that the hon. Lady, the Minister and I want everyone to enjoy.

Chris Mole: Does the hon. Gentleman accept that there are new developments in off-site fabrication and that we should not paint a picture that takes us back to the 1960s and 1970s? The Office of the Deputy Prime Minister: Housing, Planning and Local Government Committee was cautious, yet it welcomed the potential importance of off-site fabrication in increasing the rate of construction and addressing many of the quality issues that arise from a shortage of many trade skills that cannot be found and deployed on building sites.
 Many issues relating to higher quality, such as improved noise and thermal insulation, can be addressed through off-site fabrication. It is important that we do not constrain developments in off-site fabrication by imposing a standards requirement such as the amendment sets out. We should not hold back developments in off-site fabrication, because such developments could help to alleviate the housing problem by increasing the volume and quality of new housing supply.

John Hayes: Although the hon. Gentleman's intervention could never be described as pithy, it was certainly well informed. He is right to say that methods of prefabricated building have changed a great deal in recent years. In other European countries, for example, prefabricated building is already a well-established means of providing a large number of houses. Such methods are worthy of consideration—indeed, I think that the Select Committee considered some of them.
 A number of years ago in Donington in my constituency, some European-style wooden buildings were constructed as social houses. Those well-designed buildings of high quality conform to many of the standards mentioned by the hon. Gentleman. They have the support of the local community and, I understand, have been a great success. He is right to say that we should not take a crude, simplistic view of prefabricated building, but I repeat that industry representatives say that there is not yet the manufacturing capacity to build such houses in very large numbers. 
 My vision of the future is one of mixed developments in which social houses blend with market houses. We must move away from the idea of estate developments of social housing, which identify particular client groups and place them in one part of a village, town or city, isolating them from people living in other kinds of housing. I want a strategy and policy framework that facilitates such mixed developments, which might include prefabricated housing. However, large concentrations of prefabricated housing, easily identifiable by their style and construction and targeted at particular client groups, are not something that I would have thought the hon. Gentleman wants in his ideal future.

Chris Mole: It is important to understand that methods such as off-site fabrication are equally applicable to all forms of tenure. It is true that many businesses have sought to use the volume of demand from the RSL sector to initiate their business. To their frustration, they have been unable to get a sufficiently consistent stream of demand to create capacity that becomes self-sustaining and can be deployed in other sectors. Unfortunately, for all those reasons, off-site fabrication in my constituency has now ceased, but if the hon. Gentleman wants to see mixed development, he should visit an excellent mixed development in which one cannot tell what form of tenure is held in neighbouring properties. The significant precondition for achieving that development was public ownership of the land, which enabled the partnership with the developer to specify the approach that would be taken. The developers were sceptical and did not take that approach in the first phase of development, but they have done so in the second and are now thoroughly converted to the notion of mixed development.

John Hayes: The hon. Gentleman has not been in the House long, but what a good impression he is making. What a fine representative of the people of Ipswich, even though he is rather too devoted to Hayek and
 Friedman for my taste. He is a free marketeer, hook, line and sinker, with no suggestion of compassionate conservatism, or compassionate anything, about him. He is certainly very good at articulating the interests of his constituents. I accept his invitation: I will visit his constituency and that development with him. At the same time, I will organise a small function with the Ipswich Conservatives—

Chris Mole: What have I let myself in for?

John Hayes: The hon. Gentleman may expect me to do so. I will contact his office after today's sittings and make a date in my diary as soon as I can manage it. It is kind of him to invite me—indeed, he has made the invitation impossible to decline.
 We should consider all options that lead to the cost-effective construction of good-quality housing, given the problem with the number of houses being built. My anxiety, which is widely shared outside this place, is that large numbers of prefabricated houses will be built in estates. Most people have childhood memories of prefabs, usually concentrated in one part of a town or a suburb, easily identifiable and perhaps easy to stigmatise. Many prefabs were built after the bombing of the last war, and although the building methods of 50 years ago do not come up to today's standards—there were all kinds of problems with insulation, damp and so on—some people who still live in such properties today are pleased to do so. One occasionally hears cases of people resisting the demolition of their prefab, in which they have lived happily and brought up their family. 
 Although I do not want to be too negative about prefabs, I know that the hon. Gentleman will agree that they should not be the future. That is not the utopia of which I dream. He is right to say that we should not rule out different construction methods, and the amendment does not do that. It talks about ''modern methods of construction'', such as he has described. All we ask is that those methods conform to some kind of quality accreditation scheme. I do not think that that is too controversial. The amendment was designed to probe the issue. If we had intended to press it, we would have fleshed out the detail. We want the Minister to be aware of the risk that lies at the heart of his concern about numbers and cost effectiveness. He is worried that too much money is being spent to too little effect. The easy solution would be to lower standards and build more houses for the same amount of money. 
 Without the constraints that I have called for, that nightmare vision may become a startling reality—one suffered by vulnerable people in the social housing sector. I move this probing amendment on that basis. I will be interested to hear the Minister's response, and I am grateful for the interventions of two extremely diligent Labour Members who have made the debate so well informed.

Keith Hill: Speaking of nightmare visions, my own personal nightmare vision is trying to explain to my right hon. Friend the Deputy Prime Minister the headline, ''Labour MP for Ipswich hosts visit of Tory
 Shadow Housing Minister''. That might be a nightmare vision for my hon. Friend the Member for Ipswich (Mr. Mole) as well.
 The debate has ranged somewhat wider than our interpretation of the amendments. I share the priority given by the hon. Member for South Holland and The Deepings to the aesthetics of every type of housing development. That passion for better design is felt strongly by the Deputy Prime Minister, who has actively promoted higher design standards. It is a matter of the culture in the house building community. In my capacity as Minister for Housing and Planning, let me say that we have sought to draw planners' attention to the fact that design should be considered in planning applications, and we expect them to make judgments about the quality of design of proposed developments. 
 Another theme of the hon. Gentleman's remarks was the quality of new build. We expect the highest standards in quality of new build, which I made clear in my earlier remarks. The Housing Corporation will set the quality of new build as part of its grant-making function, and we expect it to keep to the already high standards applied in the housing association sector. 
 The hon. Gentleman mentioned ''modern methods of construction''—the phrase used in his amendment. That expression has a precise, technical connotation. As my hon. Friend the Member for Ipswich said, it relates to the possibility of extensive off-site manufacture. The Government's commitment to off-site and modern methods of manufacture is not to increase supply by lowering standards of provision. We are committed to off-site manufacture and modern methods of construction because we believe that they can contribute to raising quality and that, when developed on a sufficient scale, they can certainly lead to a reduction in costs and improvements in health and safety on site and speed of delivery. We are committed in principle to modern methods of construction. 
 I shall now deal in precise terms with the wording of the amendment. We recognise that some lenders and insurers may have concerns about the mortgageability and durability of buildings constructed using modern methods. However, all new buildings must conform to the minimum standards set out in the building regulations, and we do not propose to set standards above those required by the building regulations for buildings built using modern methods of construction. The regulations set standards of performance that are cost-effective and practicable for industry in ordinary situations. Higher standards would place unacceptable burdens on the industry. 
 If a greater degree of assurance about the mortgageability and durability of a building is required, there are many independent accreditation and certification schemes available with which the relevant authority could specify that the development was required to conform if it was felt that that was an appropriate grant condition. Manufacturers of building products and systems could also use those schemes. It is preferable that accreditation schemes 
 remain independent, provided by professional bodies, and available to the relevant authority. We do not propose that the Secretary of State should be required to approve such schemes in advance. In the light of that explanation, I hope that the hon. Gentleman will ask leave to withdraw the amendment.

John Hayes: The case has been well made that although it would be undesirable to prohibit modern methods of construction in proposals for social housing, enabling and encouraging those methods necessitates an appropriate concern about standards and quality. The Minister made a useful point about the Government's commitment to quality standards of construction and design, which relates to my earlier point about housing aesthetics.
 I suspect that the hon. Gentleman shares my view about the concentration of development and the need to mix developments to facilitate appropriate social cohesion, which he would acknowledge is, in itself, an aesthetic consideration. Given the Minister's appropriate response, I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Amendment proposed: No. 278, in 
clause 166, page 118, line 37, at end insert— 
 '(e) any conditions necessary to ensure equivalence of regulation between recipients of grant under this section and registered social landlords. 
 (f) any conditions necessary to ensure equivalence of standards between recipients of grant under this section and registered social landlords.'.—[Mr. Hayes.] 
 Question put, That the amendment be made:—
The Committee divided: Ayes 3, Noes 12.

Clause 166 ordered to stand part of the Bill.

Clause 167 - Disabled facilities grant: caravans

Question proposed, That the clause stand part of the Bill.

Sydney Chapman: As ever, I shall attempt to be brief, but I wish to raise one or two matters. There was talk earlier about Bright and Cobden; it may help the Committee to know that
 I come from the party of Churchill, Chatham and Chapman—and caravans, which are the subject of clause 167. As I understand it, the clause extends eligibility for disabled facilities grant to all those who occupy caravans. A caravan is defined essentially as a structure designed or adapted for human habitation that is capable of being moved.
 The guts of the clause are reflected in Government new clauses 44 to 48. I will not anticipate them, but I hope that I am in order in referring to them at least tangentially. New clause 44 would make changes and it refers to a mobile home, which is not surprising as it states: 
 ''For section 1 of the Mobile Homes Act 1983 (c.34) . . . substitute''. 
In using the terminology in clause 167, the Government are abiding by the definition of ''caravan'' presumably as defined in the Caravan Sites and Control of Development Act 1960. I want the Minister's assurance beyond doubt that the definition of a mobile home would be the same as the definition of a caravan. If it were not, the Government could find themselves subject to unforeseen consequences.

John Hayes: Owing to the way in which they have developed, a wide variety of mobile homes could not reasonably be said to be caravans. My hon. Friend is right; at one time, this may have been a simple affair, but now there are a multitude of different types of home that are mobile, but might not be caravans. They may technically be static, and mobile only by means of a trailer. They are certainly not caravans in the traditional sense.

Sydney Chapman: I am sure that my hon. Friend, as ever, is right. Perhaps the only difference between the definition of a mobile home and a caravan is that mobile homes could include houseboats, for example. My central point is that the Government might find themselves in what could best be described as legislative trouble if there are different definitions.
 My second point refers to Government new clause 44, Mr. Conway, but I am sure that you will accept that it is also central to clause 167. Government new clause 44 states that, to be eligible for a disabled facilities grant, the mobile home should be on land forming part of a ''protected site''. What is a protected site? Is it a site designated as a caravan site under the 1960 Act, or is it something else? 
 Another qualification for extending the disabled facilities grant to caravans is that as well as being on a ''protected site'', the mobile home should be someone's ''only or main residence''. I do not want to complicate matters or to confuse the Committee, although I have almost confused myself. However, someone who had a caravan parked outside their house—an environmental eyesore that irritated the neighbours—could argue under the Government's proposals that it was part of their main home. 
 Is the disabled facilities grant mandatory or discretionary? I think that they are mandatory, but they are discretionary in effect. I am sure that people have written to both Government and Opposition Members to say that they applied for a disabled 
 facilities grant for a handrail or a bath support, and that the process was long. It is usually years before they get what they want, even if the local housing authority accepts that they are entitled to a grant. I fear that disabled facilities grants are discretionary in effect because local authorities have limited budgets and supply cannot meet the demand. I raise the point because, although I am fully behind the clause, if mobile homes or caravans as defined qualify for such grants—as they should do—in practice, they will come at the end of the queue. If the Minister could give assurances or suggest any initiatives on how to deal with the problem, the Committee would be grateful. 
 On the wider issue of the definition of a caravan and a mobile home, we must remember that the word ''caravan'' in clause 167 is a substitute for the phrase ''qualifying park home''. I do not want to confuse the Committee but that is the purpose of clause 167. It underlines how essential it is to get the definitions correct. I am not necessarily asking for a reply today, but I hope that the Minister will look at the definitions because they might bring the Government a great deal of trouble. 
 This is not the first time that I have said this, but when the dust has settled and the Bill is on the statute book, the Government may feel that a consolidation Bill is necessary to deal with park homes, caravan sites, mobile homes, house boats and everything else that moves that can be lived in. The legislation is getting complicated and, dare I say it, confused.

Matthew Green: I did not intend to speak but I am moved to do so by the hon. Gentleman's excellent speech. He has touched on the plethora of terms relating to mobile and semi-mobile properties. I am now going to ask the Minister some more questions about what the grants apply to.
 There are a number of caravan sites in my constituency where people live 11 months of the year. They do so because it is easier to obtain planning permission for caravan sites if there is a month of the year when they are not occupied. Those people have the caravans as their main properties but have to move out for a month of the year because the landlord of the site obtained planning permission in that way. They do not qualify as park homes—they are extensive caravans and could almost be called chalets, but for a month of the year the tenants have to go on holiday. That month is usually January. Do the grants relate to those properties, which do not have the protection of being park homes but cannot necessarily be described as a caravan? 
 There are several wooded areas in my constituency down in the Wyre forest area and extending into the constituency of the hon. Member for Wyre Forest (Dr. Taylor) in which there are wooden chalets, which might loosely be called summer chalets. They can hardly be described as moveable, as they do not have and never had wheels, and they are basically uninhabitable, although someone could sleep in them overnight. However, they are regarded as inhabitable because both local councils, Bridgnorth and Wyre Forest, charge council tax on them. 
 The landlords' legal arrangement is that they cannot be used—not occupied, but used—for four months of the year, but for eight months they are temporarily occupiable, for want of another word. They are chalets, not caravans— although a less polite way of describing them would be that they are little more than large garden sheds. Council tax is payable, yet I wonder whether they might come under the definition of a caravan.

John Hayes: The hon. Gentleman's comments are apposite. This is the point at which the definition of park homes and mobile homes comes into question. There is an overlap, one might say, and I invite him to explore it. Many homes are seasonal: people live in them only in the summer months—for six months, rather than, as he mentioned, one month or four. Some of those homes are technically moveable—they are not park homes. I think my hon. Friend the Member for Chipping Barnet (Sir Sydney Chapman), who, with his typical mix of sagacity and alacrity, has hit upon an important legal point that the hon. Gentleman is right to amplify in his inimitable fashion.

Matthew Green: I thank the hon. Gentleman. I am trying to get the Minister to clarify precisely to which properties clause 167 applies. If it does not apply to some of the properties that we have been talking about, why does it not do so, particularly when the property in question is occupied 11 months of the year? I echo the plea of the hon. Member for Chipping Barnet: although I welcome the forthcoming new clauses on park homes and the Government's conversion on that subject, greater clarity is needed. A number of properties that are people's main residences do not fall into the category of park home; whether they can be called caravans is questionable, and they are certainly not house boats, as they stand in the middle of woods.
 I hope that the Government will clarify precisely what applies to different forms of tenure or, if ''tenure'' is not the right word, to different types of property. I receive regular correspondence on the matter, some of which I have sent on to the Under-Secretary, so she may be familiar with the one-month and four-month residencies. I should appreciate an explanation of the applicability of clause 167 and whether the Government will legislate in future to cover some of the anomalies that apply to those properties.

Robert Syms: The owners of mobile home parks quite often do not like people building much beyond, or putting too much around, their mobile homes. The point made by the hon. Member for Ludlow about tenure is therefore fairly important. In a park in which people are renting, what would be the situation in respect of grant if a dispute arose between owner and tenant? The owner might think that, in the longer term, he would not want bits and pieces such as ramps added on to a property. Such additions may be perfectly understandable for someone who is disabled, but not necessarily for a successor tenant.

Yvette Cooper: Clause 167 extends to those occupying caravans eligibility for disabled facilities grants. A disabled facilities grant is a mandatory grant administered by local authorities and is available for adaptations that enable disabled occupants to live more independently in their homes. It currently applies to people living in buildings and park homes, but not to people who live in caravans, including most Gypsies and Travellers. The clause rightly extends support for people with disabilities and removes unfair discrimination, including against Gypsies and Travellers.
 The clause amends part 1 of the Housing Grants, Construction and Regeneration Act 1996, under which disabled facilities grants are given. Under that Act, occupants of ''qualifying park homes'' are eligible for such grants, but it does not cover a wide range of other circumstances. The clause rectifies that by replacing the term ''qualifying park home'' with ''caravan'', and the term ''pitch'' with ''land'', in each place where they appear in the 1996 Act. 
 A caravan is defined with reference to the Caravan Sites and Control of Development Act 1960, which contains the standard definition of ''caravan'' in various statutes dealing with caravans and caravan sites. The definition is that a caravan is a structure designed or adapted for human habitation that is capable of being moved. I am assured that the definitions of a caravan and a mobile home are the same. The definition of a mobile home in the Mobile Homes Act 1983 refers to the definition of a caravan in the 1960 Act. Both refer to the same legal definition. 
 The hon. Member for Chipping Barnet asked whether the disabled facilities grant would apply only to protected sites. It will not; it will apply to all caravans, irrespective of the site that they are on. The hon. Member for Ludlow asked what it meant for something to be a main residence. If someone is resident on a site for 11 months and they go on holiday, the site is clearly their main residence and they should be entitled to a disabled facilities grant. However, it is reasonable for different considerations to apply for somebody with a caravan that they visit from their main residence each weekend throughout the summer. Consideration must be based not on the way in which the site owner has got their licence, but on whether the caravan is the occupier's main residence. 
 A question was asked about disputes with the site owner. A disabled facilities grant can only be paid where the site owner gives consent. There were concerns about what should happen when the site owner does not give consent. In those circumstances, the local authority should consider whether the site owner is being reasonable. If they feel that he is being unreasonable, the authority can go ahead and provide the disabled facilities grant. This is an important measure. It would be unfair for somebody with disabilities to be prevented from receiving resources to which they were entitled to help them live in their home simply because the site owner was being unreasonable. 
 The disabled facilities grant is mandatory. It is true that there are pressures on resources in many parts of the country, but we have increased the resources available for the disabled facilities grant from £56 million in 1997 to more than £100 million for the next financial year. There are pressures in different parts of the country, which can affect waiting times, but applications for the grant must be determined by local authorities within 6 months. That is mandatory. We do not think that the inclusion of people living in caravans would lead to substantial additional pressure on resources. We should not discriminate between people, or use the property in which they reside as an arbitrary way of determining who should get the grant and who should not.

Brian Iddon: If a family has no regular pitch, which local authority will take responsibility?

Yvette Cooper: The local authority needs to be clear that the caravan is stationed in their area. Where there are Gypsies and Travellers who move from place to place, the situation becomes difficult to handle. When they move on to another place, the obligation falls on to the next local authority. There is no simple way to resolve that, given that the disabled facilities grant is paid through local authorities and local authorities have responsibility for those within their geographical area. Local authorities can make arrangements with neighbouring local authorities, and those who are travelling around can try to find a settled place to reside while alterations are being made. We should not
 pretend that there is a simple answer to this matter. We will deal later with some of the questions involving Gypsy and Traveller sites, and with the need for more sites for those who are travelling from place to place.
 This provision allows local authorities to address the needs of Gypsies and Travellers who are resident in their area. It does not resolve all the problems that are created by the fact that people move from one place to another, but it overcomes an inbuilt discrimination in the current legislation that means that they cannot get any support even if they happen to be in a particular local authority area for five years at a time. That is why it is right to introduce this clause.

Sydney Chapman: I cannot let the occasion pass without thanking the Minister for giving a clear exposition of the relevant definitions and of the matters that I raised. To coin a phrase, I was not seeking to make a mountain out of an Ipswich hill—that needs to be worked on. It seemed that in order to qualify for a disabled facilities grant, a person had to occupy a mobile home or caravan which was not only their main home but also on a protected site. That surprised me, but the Minister has said that that is not the case.
 Question put and agreed to. 
 Clause 167 ordered to stand part of the Bill. 
It being Twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order. 
 Adjourned till this day at half-past Two o'clock.